Stock picking ideas.
You are done with mutual funds and index ETF. Or, they have their specific role in your portfolio, but you want to actually own “businesses” instead of a “financial product” that tracks it.
Which stock should I buy ?
We should see investing in individual stock as being “owner” of the company. You want a profitable business that will maximize your return on investment.
In this world, if you provide “value”, someone is willing to trade money for it. For example, would you rather keep $1000 or trade it for a smartphone?
The smartphone will make your life more convenient and efficient (Alarm, internet, messaging, google search, video, etc.)
How do I get start?
I came up with a good exercise to find companies that “makes sense” to you. It’s a good starting point. From there, you can slowly progress to company with specific niche industry.
Step 1: Look at things that “brings value” to your life.
How do they give value to your life?
How do they make your life better?
« It’s not about money. It’s about making the world a better place. »
Example:
Dentist/ Optometrist/ Doctor: They do things that I can’t do on my own to “heal” me.
Grocery store: access food ingredient at low cost, convenience of location, don’t need to start my own farm to feed myself
Pharmacy: provide medics and consulting
Electricity company: produce/ distribute electricity
Home Internet: use wifi in my location and alone, not sharing it, cheap price,
Phone provider: phone calls, Data (connect to Internet 24/7), cheap offer
Bank: keep your money safe + access anytime, borrow money, credit card, line of credit, mortgage, etc.
iPhone + MacBook: save time, productive tools, convenient, reliable
Discount brokerage: trade stock at low fees from your home
Gym: save me money from buying all equipments
Water kettle: boil water, save time, portable
Step 2: “Look at where you spend your money consistently over 4 months.’’
Rent
Grocery and pharmacy
Internet/cellphone
Water/ heating/ Electricity
Health Insurance
Transportation: metro pass
Order stuff online
Haircut, gym membership
Restaurants
Pizza
Uniqlo underwear.
Step 2.5 (Bonus): Associate a public company with your spending
Rent: Residential REITs (CAPREIT CUF-UN.TO), InterRent REIT (IIP-UN.TO)
Grocery and pharmacy: Loblaw (L.TO), Metro (MRU.TO)
Internet/cellphone: Rogers (RCI-B.TO), Bell Canada (BCE.TO), Telus (T.TO), AT&T (T-US)
Water/ heating/ Electricity: ZUT.TO (Utilities etf)
Health Insurance: Manulife (MFC.TO), Sunlife (SLF.TO), Great-West Life (GWO.TO),
Transportation: Canadian National Railway (CNR.TO), Canadian Pacific Railway (CP.TO), Air Canada (AC.TO)
Order stuff online: Amazon (AMZN-US), Shopify (SHOP.TO), Ebay (EBAY-US), Esty (ETSY-US), Alibaba (BABA-US)
Restaurants: Restaurant Brand (QSR.TO), MTY food (MTY.TO), Macdonald’s (MCD-US), Starbucks (SBUX-US), Chipotle Mexican Grill (CMG-US)
Pizza: Pizza pizza (PZA.TO), Domino pizza (DPZ-US), Pizza Hut (YUM-US)
Uniqlo: Fast retailing (FRCOY-US)
Step 3: Look at things you use daily/weekly:
*You don’t pay for it.
Social media: Facebook, Instagram, Twitter, Snapchat, LinkedIN,
Messaging app: WeChat, Whatsapp, Line, Skype,
Watch video: YouTube, Netflix,
Dating apps: Tinder, Tantan, Coffee meets Bagel
Online storage: Dropbox, GoogleDrive
Email: Outlook
Working app: Words, Excel
Step 3.5 bonus: Associate a public company to it
example: Facebook, Twitter, Snap, Microsoft, Line, Tencent holdings, Google, Netflix, MatchGroup, Dropbox,
Step 4: Look at your biggest purchase in your life:
Travel (flight tickets)
Computer, laptop, smartphone
Car, House, stocks
Education
Step 5: Choose your battle.
At this point, you should have lots of stock ideas for your portfolio.
You need to decide if you want to use an ETF to track a specific industry/ sector or choose the best company in that sector.
« It’s not about money. It’s about making the world a better place. »
SimpleLifeBalancing.